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Bishop announces new policies for parishes

Posted By December 5, 2013 | 1:02 pm | Featured Article #3, Lead Story #2
DIOCESAN-SEAL

By William T. Clew

Citing concerns about parish financial transparency, debts and misappropriated funds, Bishop McManus announced new policies and plans in a Nov. 22 letter to pastors.
“Along with our own incidents in the past of misappropriated funds in parishes, stories have appeared and continue to appear from around the country which are disturbing and involve faith communities of all denominations,” the bishop wrote. “We have a shared duty as pastors and as diocesan administrators to demonstrate responsible stewardship of the resources entrusted to us in carrying out the mission of the Catholic Church. I am confident that none of us takes that responsibility lightly.”
He said many parishes are flourishing, their programs supported by sound fiscal policies and effective finance councils, and some are struggling due to pastoral and demographic realities but have been prudent and transparent in order to seek increased support.
“It is my fervent hope that, with either of these two groups acting as models, the remaining group of pastors can identify effective means to get their budgets in line with their pastoral needs,” he said.  “In doing so, they will contribute to the overall strength of the Catholic Church in Central Massachusetts.”
Financial transparency to donors has been a major concern in Church life, the bishop said. He said industry-standard accounting principles have been in place for decades and the current parish manual will be reviewed for any necessary updates and made public on the diocesan website. To assure parishioners that their parishes are following these policies, he said parishes must submit the following annually:
A Cathedraticum  report signed by the pastor and finance council chairperson. (The Cathedraticum is money paid by parishes to support the offices and agencies that assist the bishop in carrying out his office as ordinary of the diocese.)
An annual financial report (including amount of parish debt and unpaid bills)
A budget for the upcoming fiscal year
A list of outstanding debts
A list of finance council members
“The budget and the financial report must also be shared with parishioners in print and on the parish website,” Bishop McManus said. “Reporting is such a serious matter that any parish not complying with these policies will be subject to an independent, in-depth audit of the parish’s spending and procedures in light of diocesan policies.
“I will be the first to admit that I did not attend the seminary in order to study bookkeeping and accounting and I suspect you did not study these either. That is why we rely on collaboration in our parishes with those lay professionals who are trained in developing budgets and business plans to assist us. They do not usurp our authority as pastors. Experience demonstrates that this ‘best practice’ is integral to parishes that succeed.”
The bishop said the diocese will begin to establish regular education sessions for pastors and seminarians on best business practices, coordinated with the Office of Ongoing Priestly Formation, and for parish finance councils, coordinated with the Office of Fiscal Affairs.
He said all parish finance councils need to understand their advisory role to the pastor and the need to review monthly parish finance reports and have meetings at least quarterly to prioritize issues and discuss recommendations for necessary action plans. They need to review and sign off on the Parish Annual Report in late October and assist the pastor in budget preparation for the coming year, to be presented each September to the parish and the diocese.
The bishop said that a perennial issue in the diocese is that 24 percent of the parishes are delinquent in paying for property and liability insurance and other group purchases.
“Unpaid bills are a symptom of a budget which is not realistic,” the bishop said. “This has necessitated that the diocese borrow from the DEF (Diocesan Expansion Fund) in order to cover parish obligations. These outstanding debts mean that hundreds of thousands of dollars in interest payments become part of the diocesan operational budget, instead of being invested in additional ministry support for all our parishes.
The bishop said that as a result, the following  new policies will go into effect immediately:
No new capital projects or DEF loans (except for emergencies)  if a parish has an outstanding debt related to these bills.
Regular reporting of unpaid bills must be shared with parishioners along with what budget cuts are being proposed by the Finance Council to balance the budget.
The finance council chair and the pastor must work with the Office of Fiscal Affairs on a plan to address outstanding bills, such as property and liability insurance.
If a parish is not maintaining its pension obligations to its employees, it should not hire any new employees. Parish employees who are part of the new 403B plan will also be asked to review their statements to see if the parish is paying its share into their plan.
“Additionally,” Bishop McManus said, “in order to address these liabilities in a more timely fashion, I have directed that a team of priests meet with the pastor of parishes with long-term, outstanding bills or debt, to discuss options for paying them.  To start this process, I have asked Father Jose A. Rodriguez, in his role as Priest Personnel Director, and Father Daniel Mulcahy, a member of the Diocesan Finance Committee, to be the first team to visit parishes.
“I cannot stress enough that, given the fact that all parishes are part of the Roman Catholic Bishop of Worcester, a corporation sole, a lack of fiscal prudence impacts the whole Catholic Church in Worcester County. Therefore, by December of 2014, parish financial reports, including outstanding debts, will be shared on our website and in The Catholic Free Press, just as we do with diocesan financials. It is also for this reason that our focus for the next 12 months will be to educate and assist finance councils and pastors in effective administration. …
“We will review the progress being made in financial meetings throughout the year.”

 

The issue of financial transparency to donors has increasingly been a major concern in the life of the Church. Along with our own incidents in the past of misappropriated funds in parishes, stories have appeared and continue to appear from around the country which are disturbing and involve faith communities of all denominations. We have a shared duty as pastors and as diocesan administrators to demonstrate responsible stewardship of the resources entrusted to us in carrying out the mission of the Catholic Church. I am confident that none of us takes that responsibility lightly.
As in all organizations, policies and procedures exist to assure all involved that we are doing what we can in prudently using Church assets. Industry-standard accounting principles, including appropriate checks and balances, are incorporated into our Diocesan Financial Policies in order to protect all of us. When followed, they can effectively demonstrate to the parishioners that we either are using their donations to accomplish agreed-upon goals or to show that current donations are insufficient to meet the needs as defined by an annual budget developed and approved by the Parish Finance Council. These basic principles have been in place for at least five decades and reflect best practices. The current parish accounting manual which has been the standard for all parishes will be reviewed for any necessary updates and made public on the diocesan website.
We have a responsibility as a diocese to assure parishioners that each parish is following these policies. To that end, parishes must submit annually the following reports, using the formats provided by the Office of Fiscal Affairs:
•    Cathedraticum report signed by the Pastor and Finance Council Chairperson
(not the bookkeeper)
•    An Annual Financial Report (including amount of parish debt and unpaid bills)
•    A Budget for the upcoming fiscal year including
•    A list of outstanding debt
•    A list of the Finance Council members.
The budget and the financial report must also be shared with parishioners in print and on the parish website. Reporting is such a serious matter that any parish not complying with these policies will be subject to an independent, in-depth audit of the parish’s spending and procedures in light of diocesan policies.
I will be the first to admit that I did not attend the seminary in order to study bookkeeping and accounting and I suspect you did not study these either. That is why we rely on collaboration in our parishes with those lay professionals who are trained in developing budgets and business plans to assist us. They do not usurp our authority as pastors. Experience demonstrates that this “best practice” is integral to parishes that succeed.
Given this reality, we will begin to establish regular education sessions for pastors and seminarians on best business practices. These sessions will be coordinated with the Office of Ongoing Priestly Formation. Equally important, we will offer consistent education programs for Parish Finance Councils, coordinated with the Office of Fiscal Affairs. All parish finance councils need to have a consistent understanding of the following:
•    Their advisory role to the pastor;
•    The need to review monthly parish finance reports and have quarterly meetings (at a minimum) to prioritize issues and discuss recommendations for necessary action plans;
•    Review and sign off on the Parish Annual Report in late October;
•    Assist the pastor in budget preparation for the coming year to be presented each September to the parish and the diocese.
One of the perennial issues we are facing is that 24% of the parishes are delinquent in payment for property and liability insurance and other group purchases. Unpaid bills are a symptom of a budget which is not realistic. This has necessitated that the Diocese borrow from the DEF in order to cover parish obligations. These outstanding debts mean that hundreds of thousands of dollars in interest payments become part of the diocesan operational budget, instead of being invested in additional ministry support for all our parishes. As a result four new policies will go into effect immediately:
•    No new capital projects or DEF loans (except for emergencies repairs) if a parish has an outstanding debt related to these bills.
•    Regular reporting of unpaid bills must be shared with parishioners along with what budget cuts are being proposed by the Finance Council to balance the budget.
•    The Finance Council Chair and the pastor must work with the Office of Fiscal Affairs on a plan to address outstanding bills, such as property and liability insurance.
•    If a parish is not maintaining its pension obligations to its employees, it should not hire any new employees. We will also ask parish employees who are part of the new 403B plan to review their statements to be aware if the parish is paying its share into their plan.
Additionally, in order to address these liabilities in a more timely fashion, I have directed that a team of priests meet with the pastor of parishes with long-term, outstanding bills or debt, to discuss options for paying them.  To start this process, I have asked Fr. Jose A. Rodriguez in his role as Priest Personnel Director and Fr. Daniel Mulcahy, a member of the Diocesan Finance Committee, to be the first team to visit parishes.
I cannot stress enough that, given the fact that all parishes are part of the Roman Catholic Bishop of Worcester, a corporation sole, a lack of fiscal prudence impacts the whole Catholic Church in Worcester County. Therefore, by December of 2014, parish financial reports including outstanding debts will be shared on our website and in The Catholic Free Press, just as we do with diocesan financials. It is also for this reason that our focus for the next 12 months will be to educate and assist finance councils and pastors in effective administration.
While this letter is addressed to all pastors and parishes in order that everyone may understand both the specific policies and the reasons why they exist, the message should not be interpreted as one of doom and gloom throughout the diocese. Many parishes are flourishing, and their pastoral programs are supported by sound fiscal policies and effective finance councils. Some parishes are struggling to find necessary funds to meet the needs of the parish due to pastoral and demographic realities, but they have been prudent in their financial decision making and are transparent through their finance councils to their parishioners in order to seek increased support. It is my fervent hope that, with either of these two groups acting as models, the remaining group of pastors can identify effective means to get their budgets in line with their pastoral needs.  In doing so, they will contribute to the overall strength of the Catholic Church in Central Massachusetts. We will review the progress being made in financial meetings throughout the year.
This letter will be shared with all parishioners later this month on our diocesan website and in The Catholic Free Press.

With every prayerful best wish, I remain,
Sincerely yours in Christ,
Most Reverend Robert J. McManus
Bishop of Worcester